Monday, May 12, 2014

The Gold Price Traded as High as $1,304.50 Closing Up $8.30

12-May-14PriceChange% Change
Gold Price, $/oz1,295.608.300.64%
Silver Price, $/oz19.500.422.22%
Gold/Silver Ratio66.441-1.038-1.54%
Silver/Gold Ratio0.01510.00021.56%
Platinum Price1,440.9012.000.84%
Palladium Price808.909.001.13%
S&P 5001,896.6518.170.97%
Dow in GOLD $s266.410.080.03%
Dow in GOLD oz12.890.000.03%
Dow in SILVER oz856.28-13.11-1.51%
US Dollar Index79.950.020.03%

Today the GOLD PRICE traded as high as $1,304.50, but fell back at Comex close to $1,295.60, up only $8.30. Silver added 42.3 cents to 1950c.

Over the weekend the gold price traded down to $1,277.70, but began recovering and today climbed steadily to a $1,304.50 high. Thrice now gold has validated the bottom boundary of an even-sided triangle (forming since mid-April.). If the GOLD PRICE closes above $1,315.80 (last low), it will break out of this triangle.

The SILVER PRICE pattern over the last three days followed gold's, with a 1905c low over the weekend and a 1967c high today. Silver has now walked through its downtrend line and closed today above its 1949c 20 day moving average.

Most frustrating part of my job is watching investors. Why? Because they love to buy a rising market, especially after it's been rising a long, long time -- precisely when they shouldn't buy. And they hate to buy a low market, especially if it's been low a long time, like silver and gold prices. But the road to riches is not "buy high and sell low," but just the opposite. And nowhere are the nerves wracked more or more courage needed than to buy when it's low, based on your own knowledge and analysis.

So I sit here watching investors shun gold and silver at precisely the instant they ought to be buying. I reckon that goes with the territory.

Expect silver and gold prices to grind higher through May. Stocks are topping now, although they may make additional marginal new highs. Watch for it.

As I've been expecting, Stocks made a new high here in May. Dow today posted a new all time high close at 16,695.47, up today 112.13 or 0.68%. S&P500 joined in, up 18.17 (0.97%) to 1,896.65. But if I owned stocks I would be sore distressed about the non-confirming Russell 2000 and Nasdaq Composite and Wilshire 5000, all many furlongs from new highs.

It is instructive for my Tennessee hick mind to gaze upon the Bank Stock Index ($BKX) divided by the S&P500 ($SPX). Lo, since 2011 late Bank Stocks have outperformed the S&P500, yea, even these very scoundrel, bankrupt, Too-Big-To-Fail- Too-Big-To-Jail banks. A clearer sign of faith in the financial system would be impossible to imagine than faith in these parasitic behemoths. Behold! the spread broke down early in April, or, in English, the S&P500 began outperforming the Bank Stock Index.

Lo, also instructive to my benighted mind, which lives so far back in the woods that I have to order sunlight from Sears and Roebuck: Divide the Bank Stock Index by Gold. Since (as you would expect) the gold peak in August 2013 bank stocks have outperformed gold as faith in the (preposterous, ridiculous, jerry-built, predatory, corrupt) financial system solidified. That trend went into high gear in 2013, but turned and broke down in January 2014. It remains in an overall downtrend, and within that downtrend is -- get this -- trending down.

What can it all mean? That investor confidence in the financial system is turning down and shifting to gold, and, ultimately that implies, from financial to tangible assets. In case you're wondering, the BKX has turned down against silver as well.

But what do I know, a durned nacheral born fool from Tennessee? What's my hick opinion against all them Wall Street Smarties?

Last Thursday the head criminal at the European Central Bank (ECB) one Mario Draghi (look for his picture coming in post offices soon) announced he would begin inflating the euro more. As usual, he announced no real move but only jawboned, but that was enough to break the euro's back. Friday the US dollar index shot up 45 basis points to end at 79.93. The euro's uptrend was crushed. The Yen was indifferent.

Today the US dollar index rested quietly in a narrow range and rose only 2 basis points to 79.95. The euro fell another 0.1% to $1.3757, while the Yen dropped slightly (0.25%) to 97.92. Dollar should remain strong for several months, although technically it must still close above 80.20 to confirm its reversal.

Before we turn from stocks, let it be noted that in spite of new all time highs in the Dow and S&P500, the Dow in silver did not rise but fell. The Dow in Gold rose only 0.2%, and is nowhere near its all time high (13.80 oz or G$285.27 gold dollars).

Aurum et argentum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.